When KI Varaprasad Reddy, founder and MD, Shantha Biotechnics was awarded the Padma Bhushan award in 2005, the company was pioneering biotechnology and the art of genetic engineering. The company is also the first Indian firm to develop, manufacture and market a recombinant human healthcare product in India . Now that a France-based drug maker has acquired a stake in Shantha Biotechnics for $783 million, Sanofi-Aventis is exploring new vaccine programs in the country. Talking to FE?s BV Mahalakshmi, Varaprasad Reddy, who has a 13.4% stake in Shantha, says he is upbeat on the product pipeline and other platform technologies which are expected to hit the market in the next three years Excerpts:

What is your reaction to the high valuations for a new makeover and is this a fair game for understanding the strengths of your company? Would you look at a further stake sale?

We are committed to breaking new ground in modern biotechnology to address critical healthcare needs of the developing world. We are currently focusing on R&D for the development of generic biologicals, novel therapeutic antibodies, proteins and vaccines. We are keen on exploratory research in oncology, infectious diseases and new platform technologies. For making cutting edge technologies available to the common man, we feel that the current valuations are right. We have a deep sense of commitment which has characterised our journey and has placed in the forefront of exciting scientific ventures.

On the new management makeover, there has been global recognition to the company due to its scientific value creation. We plan to grow to Rs 400 crore from the present Rs 210 crore with many innovative vaccines hitting the market. For the current fiscal year, sales are expected to be around $90 million and are expected to grow significantly given the commercial resources of Sanofi Pasteur and through the development and launch of Shantha?s pipeline of new vaccines. Presently, I have not decided on stake sale yet.

In terms of recognition by the regulating agencies, where does Shantha stand and how is it different from the days when biotechnology was considered as just re-engineering of generic products?

Shanvac- B is the first Indian Hepatitis-B vaccine to be pre-qualified by WHO, Geneva , for supplying to the UN agencies globally. Today, we cater to major international markets including Asia-Pacific, Africa, CIS and Latin America in addition to UNICEF and Pan American Health Organisation (PAHO). We have also obtained WHO-Geneva pre-qualification for its combination vaccine of DPT+ Hepatitis-B vaccine Shantetra, enabling supplies to UN Agencies. We want to bring in as many vaccines under the national immunization programmes to benefit the masses across the globe. We are on track and the current pre-WHO qualifications will benefit for those needy countries by way of exports.

We see the new makeover as more complimentary. While Shantha is developing vaccines for HPV which will soon be entering phase I trials and a rotavirus, Sanofi has vaccines for Hepatitis A, Inactivated polio vaccine (IPV), dengue and pneumococcal diseases. Sanofi Pasteur offers protection with vaccines against 20 infectious diseases. The company invests more than 1 million Euros in R&D. Our product pipeline by Shantha include: launch of typhoid vaccine in the next six months, a rotavirus vaccine in association with National Institutes of Health by 2011 and a HPV vaccine for cervical cancer by 2013 besides getting marketing rights for a dengue vaccine.

How did the journey begin since the days when VC funding and PE was a distant dream?

The initial years were tough. Banks and financial institutions viewed the project skeptically and refused to fund the project. The project began modestly as an R&D outfit at the Osmania University under the industry-university interactive programme in 1993 and later at the Center for Cellular and Molecular Biology (CCMB) until an independent R&D facility was built. We received a big boost with the entry of HE Yusuf Bin Alawi Abdullah, foreign ninister of Sultanate of Oman, who invested money in his personal capacity along with other friends as co promoters in 1995. We also got long term loans from Oman International bank at low rates of interest. The perseverance and hard work finally paid. In 1997, Shantha developed India ?s first r- DNA Hepatitis-B vaccine. And there has been no looking back ever since. However, we wanted to grow and needed partnerships or some amount of handholding exercise. We then became part of the Merieux Alliance group after in November, 2006. But R&D Shantha is a research-driven company, ploughing back more than 25% of its revenues into R&D activities.

Is the vaccine industry growing? With the spread of bird flu and swine flu, what kind of novel vaccines can one expect?

The demand for vaccines is increasingly growing and has come to the spotlight with bird flu and swine flu spreading worldwide. While India is not lagging behind in the vaccine R&D, but it can still be improvised provided we have more resources. Today, exchange of biological materials and reagents is still difficult and there is no exclusive funding for vaccine R&D. The future is with niche technologies like needle-free vaccines and cold-chain free vaccines to create impact during forecast period according to certain studies. For swine flu, Sanofi Pasteur estimates that it will have the first A(H1N1) vaccine doses ready for public health officials within four to six months. This vaccine would help prevent the spread of the novel influenza A(H1N1) virus strain. It has also received an order from the French Ministry of Health for the initial supply of 28 million doses of the new A(H1N1) influenza virus vaccine in final presentation, with an option for an additional 28 million doses.

What are you looking at as your next milestone?

We see a lot of potential for the cholera vaccine which is also a first time in the world. Cholera is an extremely virulent disease that affects both children and adults. Globally number of cholera cases probably exceeds one million causing 100,000 to 130,000 deaths per year, with most of the cholera deaths occurring in Asia and Africa . The use of the parenteral cholera vaccine has never been recommended by WHO due to its low protective efficacy and the high occurrence of severe adverse reactions. To alleviate this problem, International Vaccine Institute (IVI) and Shantha have come together to develop an oral killed bivalent cholera vaccine. The technology for producing the vaccine was transferred by IVI to Shantha. This is bivalent vaccine that has proven to be safe and efficacious as proven in a large phase III clinical trial in over 85,000 at NICED in Kolkata. The vaccine has an overall efficacy of 70% over two years which is more than the licensed vaccines like Dukoral. The vaccine, Shanchol, has been launched in India. We will be submitting the product summary file (PSF) for WHO pre-qualification by September end. Post WHO pre-qualification, the vaccine will be made available for UNICEF to be used in Africa and Asia by 2010.

The vaccine can be used as a travellers vaccine and is expected to be the first product from Shantha that can be launched in the regulated markets.